Potential cost savings of frequent flyer miles for business travel

The mileage redemption strategy is a procedure used by many business firms to reduce air travel costs, in which the frequent flyer miles of traveling employees accumulated during business trips are applied to their future business trips to obtain “free” air tickets. This paper presents a framework that investigates how the frequent flyer miles can be used in the most effective way to reduce air travel costs by those firms that are either using the mileage redemption strategy or considering the use of the strategy. The framework can be implemented quite easily by a spreadsheet software such as Microsoft Excel.     

A heuristic method for effectively using frequent flyer miles for stochastic business trips

Today, many business firms are requiring employees to use the frequent flyer miles accumulated during business trips to obtain free tickets for their future business trips. This paper presents a method of using frequent flyer miles in a more cost-effective way than the methods currently used by firms. The proposed method combines features of the existing methods, while it avoids the most serious limitations of these methods. The simulation results imply that the proposed method produces lower travel costs than existing methods in most practical situations. The method is simple and can be used quite conveniently by travelers having no technical background.     

Drivers of airline loyalty: Evidence from the business travelers in China

This paper examines the key factors that determine business traveler loyalty toward full-service airlines in China. Based on literature review and panel interview, ten airline attributes under three categories were derived: (a) operational factors: safety, punctuality, and aircraft; (b) competitive factors: frequency of flights, schedule, frequent flyer program, ticket price, and reputation; and (c) attractive factors: in flight food & drinks and in flight staff service. We surveyed 2000 Chinese business travelers on domestic flights, obtaining 462 usable questionnaires. Hierarchical regression analysis reveals that reputation, in-flight service, frequent flyer program, and aircraft have the greatest influence in driving airline loyalty.     

Living “up in the air”: Meeting the frequent flyer passenger

This paper uses a large database of approximately 37,000 passengers and three different estimates to analyse the characteristics of the frequent flyer and the differences between frequent flyers and occasional flyers. The results show that frequent flyers are middle-aged men with a high level of education who take domestic flights for business reasons at both hub and regional airports, where they make a purchase and/or consume F&B. Frequent flyers fly on both low-cost and traditional airlines, are more likely to stay overnight at a relative's or friend's home and travel to the airport by private or rented car.     

The effect of frequent flyer programs: A case study of the Korean airline industry

Frequent flyer programs are important for airlines in Korea in their marketing of services. This paper develops a conceptual model to investigate the effect of such programs by examining the relationships them and, airline service quality, pricing, passenger satisfaction, airline image, and airline selection. Path analysis is used to analyze data collected from Korean international air passengers. The results show that frequent flyer programs have direct and indirect effects on pricing, passenger satisfaction, airline image, and airline selection. In addition, their effects on passengers' selections are significantly different between Korean and foreign airlines.     

An investigation of service quality,customer satisfaction and loyalty in China's airline market

Customer loyalty is a source of competitive advantage and an important intangible asset to any organisations, but empirical evidence from China's airline market regarding the determinants of passenger satisfaction and loyalty is lacking. This paper investigates the service quality of four major airlines in China's domestic market and explores the links between their service quality and customer satisfaction, as well as the conditions under which airlines can retain existing passengers. In line with previous studies, service quality variables are significant factors influencing customer satisfaction levels. However, satisfactory service was not found to result in higher customer loyalty among business travellers. In comparison to Hainan Airlines, passengers who travelled with Air China, China Southern and China Eastern were more likely to switch to an alternate carrier, indicating lower levels of brand loyalty. In addition, the frequent flyer programs (FFPs) have been largely a failure for the four major airlines in terms of increasing customer loyalty, as revealed in this study. It is necessary to draw distinctions between business and leisure travellers when studying the determinants of customer satisfaction and customer loyalty. Ticket pricing had a positive and significant effect on passengers' overall satisfaction and in turn strengthened customer loyalty among leisure travellers, but achieved no impact on the satisfaction and loyalty of business passengers. Some demographic variables such as gender, income and education are statistically significant for one group of passengers but not for another in the probit models estimated. It is suggested that different marketing strategies may be used to target different market segments to improve customer loyalty.     

Legacy carriers fight back: Pricing and product differentiation in modern airline marketing

The adoption of the low-cost carrier business model has applied competitive pressure on established network or “legacy” carriers, by offering fares at prices that legacy carriers find it difficult to match and still cover their fixed costs. This paper reports how two medium-sized national airlines-Air New Zealand and Air Canada-have coped with the low-cost threat by, in effect, turning their fixed costs into profit centres. Features such as full regional networks, long-haul connections, frequent flyer programs, membership in global alliances, lounges and business class cabins can be bundled into products which can be marketed and sold profitably to business and even some leisure travellers, and which cannot be easily replicated by low-cost carriers. Although not panaceas, the innovations of Air New Zealand and Air Canada to the competition they face in their domestic and trans-border markets demonstrate the possibility of an effective legacy carrier response to the low-cost carrier business model.     

The choice of air carrier, flight, and fare class

This paper reports the development and interpretation of air traveler choice models to gain insights into the tradeoffs air travelers make when they choose among different carriers, flights, and fare classes. Such insights can be used to support carrier decisions on flight scheduling, pricing, seat allocation, and ticket restrictions. This paper develops a conceptual framework and applies it to the choice of carrier, flight, and fare class as a basis for analyzing air travel demand in a competitive market. Model estimation results are used to quantify the importance of carrier preferences, market presence, quality of service, frequent flyer program membership, schedule convenience, and fares on carrier travel demand. The empirical results provide measures of the premium that business and leisure travelers are willing to pay to avoid schedule delays, to choose a carrier in which frequent-flyer program they participate, and to obtain the amenities and freedom from travel restrictions associated with higher fare classes.     

Airline frequent flyer programs: equity and attractiveness

The scheme of a frequent flyer program describes how travelers accumulate and redeem their frequent flyer miles in the program, and determines the amount of benefits travelers can receive from the program (e.g., number of free trips). In the US, there are three basic types of frequent flyer program schemes (standard, discount, and non-mileage schemes). This paper investigates, by type of traveler, which scheme is most (or least) attractive to customers, so that each airline can select the most appropriate (or attractive) scheme for its target audience. The study results imply that the “non-mileage” scheme may be most attractive to travelers with low average trip miles (flown miles per trip), while the “standard” scheme may be most attractive to travelers with high average trip miles.     

Integrating frequent flyer programs in multilateral airline alliances

Forming branded alliances has become a common strategy in the airline industry. These can be defined as ‘multilateral alliances’ as opposed to bilateral alliances. Limited attention has been paid to assessing the impact of multilateral alliances on complex sub-networks, such as distribution networks, cargo alliances and frequent flyer programs. These sub-networks are ‘derivative networks’ within multilateral alliances. These derivative networks create several dilemmas as they evolve causing airline managers to confront fundamental questions regarding harmonization, conflict resolution, and organizational structure.     

Adoption and loyalty toward low cost carriers: The case of Taipei–Singapore passengers

This study explores the determinants for the duration of airline passengers to adopt a low cost carrier (LCC) and their loyalty toward the LCC. The analysis results of travel information on 338 passengers traveling between Taipei and Singapore show that business passengers take longer duration to accept the LCC. Cheaper fares and convenient booking channels can shorten the passenger’s duration to adopt the LCC, whereas airline image and safety consideration can increase the duration. Frequent flyer programs and convenient booking channels can increase the passengers’ loyalty toward the LCC.     

Traveler perceptions and airline choice: A multivariate probit approach

We investigate the factors that affect passenger decisions regarding airline choice. Three Multivariate Probit (MP) models are developed to analyze data for a sample of 853 respondents. This methodology allows for modeling the simultaneous, yet separate, consideration of airline choice determinants. Fare, safety and reliability, and friendly-and-helpful staff during flight are the most important determinants of airline choice. In-flight entertainment and frequent flyer program are considered to be less important. Results clearly depict differences in the significance of these factors among passengers with different socio-demographic and trip characteristics.     

A comparative study of hospitality and tourism graduates in Australia and Hong Kong

This paper evaluates the career experiences and perceptions of graduates from the School of Hotel and Tourism Management at the Hong Kong Polytechnic University and the School of Hospitality, Tourism and Marketing at Victoria University in Melbourne, Australia towards the programmes that they undertook. The two cohorts of graduates exhibited broadly similar career histories and expressed similar attitudes towards the quality, strengths and weaknesses of their respective programmes. In both cases, female students dominate the graduate cohort and about half of the respondents were found to have left the tourism or hospitality field within 3–5 years after graduation. Graduates believe that their general business and general education subjects play a stronger role in acquiring their first and current jobs than specialist tourism, hotel management and food service subjects. The findings highlight the challenge facing the university sector in attempting to balance the desire to provide a broadly grounded liberal education with the student desire for practical training. Copyright © 2003 John Wiley & Sons, Ltd.     

Estimating the sensitivity of small airport catchments to competition from larger airports: A case study in Indiana

An accurate estimation of airport catchment area enables airlines and airport operators to make informed decisions and to target potential markets precisely. This study uses the state of Indiana as a case study to estimate traffic leakage from the local airport, Indianapolis International Airport (IND), to two large hub airports in Illinois, the neighboring state of Indiana, namely Chicago O'Hare International Airport (ORD) and Chicago Midway International Airport (MDW). By using a decision making model that considers flying cost and access cost, this study simulates from local passengers' perspective which origin airport delivers the most cost effective flight itinerary. Using the top 20 routes of IND in 2018 as model inputs, the catchment area of two Chicago based airports in Indiana with variable coverage is plotted for different traveling scenarios. The analysis shows that an airport catchment area is sensitive to location, service level and traffic volume of competing airports nearby, as well as purpose of travel (business or leisure), number of travelers in a group (single, couple, family or multiple), length of trip, destination (domestic or international), preference of airlines (network carrier or budget carrier), and frequent flyer program status (premier member or general member). These findings could be valuable to all three aforementioned airports as well as airlines serving these airports when allocating operational and marketing resources. More importantly, this study creates a generic model that could be used by virtually any airport to estimate scenario-based catchment area using readily available itinerary and spatial data without resorting to expensive passenger surveys.     

Evaluating frequent flyer programs from the air passengers' perspective

Frequent flyer programs are used as a common strategy in the airline industry. They can be defined as a service quality attribute that consists of some redemption of free flight miles and can determines the selection of airlines. It has been argued that they can act as an entry barrier, but limited attention has been paid to assessing the impact of this strategy on passengers’ perceptions of service. They are generally part of broad airline service quality parameters and thus can creates dilemmas for airline managers, passengers and regulators regarding their added value, costs and competitive effects on industrial organization.     

Hospitality entrepreneurs managing quality of life and business growth

The hospitality industry is dominated by small- and medium-sized enterprises (SMEs).They are often led by entrepreneurs who face the challenge of simultaneously managing business decisions and their own wellbeing. The competitiveness of tourism destinations often depends on these entrepreneurs and therefore understanding their motivations and work patterns is critical. Research on individual wellbeing increasingly builds on the concept of quality of life (QoL). Hospitality and tourism literature so far predominantly focused on investigating QoL for tourists and residents, rather than for entrepreneurs’ QoL, even though being key stakeholders in the hospitality industry. Therefore, this study explores the factors influencing hospitality entrepreneurs’ quality of life (“HE-QoL”) and how these relate to business growth. Results of a 380 hospitality entrepreneurs’ survey identify six distinct factors of HE-QoL. Two groups of HE-QoL are identified with significant differences in fitness level activity, entrepreneurial competencies and business growth. Findings lead to recommendations to reduce stress to improve HE-QoL, and to develop entrepreneurial competencies, which help to cope with entrepreneurial challenges. Tourism destinations and politics can support hospitality entrepreneurs in these actions by creating conditions that foster social exchange in regional communities and trust in political and economic stability.     

Small business— small minded? Training attitudes and needs of the tourism and hospitality industry

The Australian tourism and hospitality industry consists of at least 80% small business operators scattered over a wide range of urban and rural environments, consequently it has not been easy for training providers to assess accurately the needs of the industry as a whole and provide specialised programmes. During 1996, Tourism Training Victoria conducted a survey of training needs of tourism and hospitality operators. Results indicate that there is a shortage of skilled staff and owner‐managers with little management training or qualifications, who nonetheless recognise their shortcomings and needs for further education and training, particularly in the marketing and business areas. Barriers to further training include the cost of training and inflexibility of hours and place of delivery. Copyright © 2001 John Wiley & Sons, Ltd.     

An application of the airport service quality model in South Africa

Passengers’ expectations of service quality at airports are becoming increasingly important as air traffic grows. This research investigated passengers’ perceptions of airport service quality at O.R. Tambo International Airport, South Africa. An existing model placing the concept of passenger expectations central to measuring an airport’s specific level of performance was applied. The results proved significant in terms of the investment made by the airport in staff training and highlighted areas for improvement. The results show that business travellers and leisure travellers have different opinions regarding the importance of services offered by airports and of the level of performance at ORTIA in particular. Significant differences also occur in the perceptions of frequent travellers and infrequent travellers.     

Determinants of selection of full-service airlines and low-cost carriers—A note on business travellers in South Africa

The research conducted in South Africa follows similar studies conducted in UK and Brazil, in investigating factors that may influence business travellers in their selection of full-service airlines or low-cost carriers. On comparison of the studies, findings related to the influence of company size, loyalty programmes, in-flight service and airport lounge facilities appear to coincide but some differences in conclusions drawn on the influence of variables such as price and flight frequency were evident in South Africa.     

Business travellers' perception of service quality: a prefatory study of two European city centre hotels

The business traveller contributes significantly to the turnover of the hotel industry and, with the globalisation of business, this sector shows signs of increasing growth. Service quality has now become one of the main factors used to gain competitive advantage, thus the industry must focus more specifically on the needs and expectations of its business customers. The aim of this paper is to focus on the business travel market and more specifically on the comparison of two hotels in two European cities, Brussels and Manchester. This area of research has not been attempted before and will provide an interesting comparison with findings in USA. A literature review identified the relevant attributes used to measure service quality, which were utilised to design a questionnaire, distributed to customers in a five star hotel in Manchester and in Brussels. The primary data obtained were then compared with the findings of other researchers. The analysis indicated that Brussels scored the majority of the attributes more highly (many significantly) than did Manchester. This may be influenced by the international profile of the Brussels respondents who tended to travel on business more frequently than the Manchester sample. The comparisons with the USA surveys found some inconsistencies that might be attributed to societal differences.Copyright © 2001 John Wiley & Sons, Ltd.